By Shakeh Avoyan
Foreign direct investment in the Armenian economy rose by 11.6 percent to almost $140 million in the first half of this year mainly due to the partial liberalization of the country’s mobile phone sector, a senior official said on Tuesday. Deputy Minister of Trade and Economic Development Tigran Davtian told RFE/RL that the start of competition between ArmenTel, the Greek-owned national telecommunications operator, and the Lebanese-owned start-up called VivaCell translated into “tens of millions of dollars” in capital investments.
“There are serious and rapid investments that are being made in the telecommunications sphere,” he said. “Competition has certainly had a positive impact on it.”
According to Davtian’s ministry, ArmenTel was Armenia’s single largest foreign investor with $58 million spent during the period in question. The figure includes substantial proceeds from the revenues earned by the company within Armenia. ArmenTel’s first-half profits jumped by as much 67.8 percent to $18 million.
It is not clear what percentage of those investments was channeled into ArmenTel’s underdeveloped wireless network that all but collapsed with the launch of the VivaCell network on July 1. The OTE subsidiary promised to remedy the still mysterious problem by the end of last month. However, ArmenTel’s long-suffering subscribers again found it practically impossible to make phone calls on Monday and Tuesday.
The Armenian government has strongly challenged the credibility of ArmenTel’s investment figures in the past.
Davtian said Russian and other foreign companies have also made substantial investments in other sectors of the Armenian economy such as construction and mining. He said the total amount of foreign investment is on track to surpass the record-high level of $305 million reported by the government last year.
The bulk of those injections came from foreign firms already operating in Armenia and their impact on job creation was therefore limited. Major Western companies still rarely do business in Armenia. Analysts attribute their lack of interest to the country’s flawed business environment and the entire region’s persisting negative image in the West.
Davtian said greater foreign investment is vital for ensuring a major increase Armenia’s modest exports and thereby maintaining its robust economic growth. “Our economy has reached a point where its further growth requires increased exports because the domestic market is already mainly saturated,” he explained.